The labor force includes 54.66 millionemployed people and more than 1.1 million unemployed people The labor force of working age in 2019 is estimated to be 49.1 million people, an increa
The theoretical basis of unemployment
Concept and classification of unemployment
1 What is unemployment and unemployment rate?
- The unemployed are people in the social labor force who do not have a job and are actively looking for work.
- The unemployment rate is the proportion of the unemployed compared to the total number of people in the labor force.
Unemployment is a complex phenomenon that needs to be classified to understand it clearly Can be divided into the following types: a Classification by type of unemployment
3 Unemployment divided by gender (men - women);
4 Unemployment divided by age (age - occupation);
5 Unemployment divided by territory (urban, rural, );
6 Unemployment divided by ethnicity and race. a Classified by reason of unemployment
- Quit job: People who voluntarily quit their job for different reasons such as low salary, not suitable for the job,
- Loss of job: People who are laid off from their jobs by production and business units for some reason.
- New entrants: People who are adding to the labor force for the first time, but have not yet found a job, and are actively looking for work.
- Re-entry: People who have left the labor force and now want to return to work but have not found a job. b Classification by origin of unemployment
- Temporary unemployment: Occurs when some workers are looking for jobs or looking for better jobs that suit their own needs.
- Structural unemployment: Occurs due to the mismatch between the structure of labor supply and demand in terms of skills, occupations, locations, etc.
Cyclical unemployment arises from a decrease in overall labor demand, primarily driven by a decline in aggregate demand during economic recessions This type of unemployment affects the entire labor market, reflecting the broader economic downturn.
Unemployment caused by non-market factors arises when wages exceed the equilibrium level of the labor market, often influenced by socio-political conditions.
- Workers need time to find the most suitable job for them
+ Due to changes in labor needs among businesses
+ Due to changes in the working needs of workers
+ There are always new people joining or re-entering the workforce.
- The excess of supply over demand for labor.
+ Due to the Minimum Wage Law, the impact of trade unions.
+ Due to changes in economic structure.
+ Due to the cyclical nature of the economy
4 Impact of unemployment a Negative impact
+ Unemployed individuals and families suffer many disadvantages from loss of income, erosion of skills, and poor psychology.
+ The relationship between changes in unemployment output was discovered by Arthur
Okun's Law states that a 2% decrease in GDP relative to its potential results in a 1% increase in unemployment For instance, if GDP drops from 100% to 98% of its potential, the unemployment rate would rise from 6% to 7%.
Okun's law shows the relationship between potential output (Y*), actual output (Y) with the natural unemployment rate (Un) and actual unemployment rate (Ut)
+ Many social evils can easily arise.
+ The government has to spend a lot of unemployment benefits
+ Workers have reduced trust in government policies b Positive impact
A moderate level of unemployment can serve as a reserve labor force, facilitating the necessary adjustments in the economic structure and fostering growth Additionally, periods of unemployment allow workers to enjoy increased leisure time, contributing to their overall life satisfaction and well-being.
5 Measures to reduce unemployment rate
+ Strengthen the activities of job introduction services
+ Enhance training and retraining of resources.
+ Create jobs and better salaries at all attractive salary levels to attract more workers. + Organize vocational training programs and well-organize labor markets.
+ Apply fiscal and monetary policies to increase aggregate demand to stimulate businesses to expand production scale and attract more workers
Vietnam's unemployment situation
Overview of the unemployment situation in Viet Nam in the period from 2019 to 2023
From 2019 to 2023, Vietnam's unemployment rate has remained relatively stable and low, fluctuating between 1.68% and 2.38% The highest recorded unemployment rate during this period was 2.38%.
2021 and a lowest level of 1.68% in 2019
Vietnam's unemployment rate rose from 1.68% in 2019 to 2.10% in 2020, largely due to the economic effects of the COVID-19 pandemic It further increased to 2.38% in 2021 but saw a decline to 1.92% in 2022, reflecting a recovery in economic activity and labor market conditions In the second quarter of 2023, the unemployment rate slightly increased to 2.30%, up from 2.25% in the first quarter.
Figure 1 - Annual unemployment rate from 2019 to 2023
Figure 2 - Quarterly unemployment rate from 2019 to 2023
Vietnam's unemployment situation is influenced by economic growth, labor market policies, and demographic trends Recent rapid economic expansion, particularly in manufacturing, construction, and services, has generated more jobs and raised incomes for many workers However, challenges persist, including the need to improve labor quality and productivity, enhance human capital development, and address skills mismatches Effective labor market policies are crucial for promoting job creation and reducing informality, with initiatives such as expanding social protection playing a significant role.
8 schemes, supporting entrepreneurship and innovation, strengthening labor inspection and enforcement, and facilitating labor mobility The demographic trends also have an impact on the unemployment situation in Vietnam
From 2019 to 2023, Vietnam has sustained a low and stable unemployment rate, demonstrating resilience despite external shocks and policy changes This stable unemployment situation highlights the country's positive economic performance and social development However, it also presents challenges that necessitate further reforms and investments to ensure continued progress.
Analyze the unemployment situation over each year
1 Unemployment situation in Vietnam in 2019
In 2019, prior to the Covid-19 pandemic, Vietnam experienced a low unemployment rate, which slightly decreased compared to 2018 According to the General Statistics Office, the overall unemployment rate for the year was 1.98%, with quarterly figures showing 2.00% in the first quarter, 1.98% in the second and fourth quarters, and 1.99% in the third quarter The unemployment rate varied by region, standing at 2.93% in urban areas and 1.51% in rural areas.
In 2019, the country's average workforce reached 55.77 million individuals, reflecting a growth of 413,000 people, or 0.75%, from the previous year This labor force comprises 54.66 million employed individuals and over 1.1 million unemployed persons.
In 2019, the working-age labor force in the country reached approximately 49.1 million, reflecting an increase of 527,700 compared to the previous year Of this total, 17.1 million individuals reside in urban areas, representing 34.8% of the labor force The female working-age population accounted for 22.4 million, or 45.6% Additionally, the number of trained workers at the "Elementary" level or higher was estimated at 12.7 million, making up 22.8% of the workforce, which marks a 0.8 percentage point rise from the previous year.
Labor force in urban and rural areas
Figure 3: Labor force in urban and areas b Employed people
In 2019, the number of employed workers aged 15 and older in the United States reached approximately 54.7 million, reflecting an increase of 416,000 from the previous year Notably, urban areas contributed significantly to this growth, with employment figures hitting 18.1 million, which accounted for 33,000 of the total increase.
In 2019, the average monthly salary for salaried workers in Vietnam was 4.8 million VND, with urban areas reporting the highest average at 6.2 million VND, while rural areas had a lower average of 5.7 million VND.
Figure 4: Quarterly Unemployment rate in 2022
In the first quarter of 2019, approximately 1.1 million working-age individuals were unemployed, reflecting a decrease of 3,500 from the previous quarter and a reduction of 8,200 compared to the same period last year This data indicates an estimated unemployment rate of 2.17%.
In the second quarter of 2019, the unemployment rate fell to 2.16%, reflecting a continued trend of low unemployment There was a noticeable decrease in both underemployed and informal workers compared to the same period in 2018 However, the issue of young people who are neither in school nor employed persists at a concerning level.
In the third quarter of 2019, the unemployment rate for the working-age population was estimated at 2.17%, reflecting a slight increase of 0.01 percentage points from the previous quarter, while showing a decrease of 0.01 percentage points compared to the same period last year.
In the fourth quarter of 2019, the unemployment rate among working-age individuals was 2.15%, with nearly 1.11 million people unemployed, reflecting a decrease of 0.2 percentage points from the previous quarter.
Vietnam is experiencing a slight decline in its unemployment rate, alongside rising labor productivity and income levels However, the unemployment rate remains notably high among young workers aged 15-25, particularly in urban areas where it exceeds that of rural regions.
2 Unemployment situation in Vietnam in 2020 a First quarter of 2020
In the first quarter of 2020, the number of unemployed individuals of working age reached nearly 1.1 million, reflecting an increase of 26.1 thousand from the previous quarter and 26.8 thousand compared to the same period last year The unemployment rate for this demographic rose to 2.22%, marking an uptick of 0.07 percentage points from the previous quarter and 0.05 percentage points year-over-year Urban areas reported a higher unemployment rate of 3.18%, which is up by 0.08 percentage points from both the previous quarter and the same time last year, while rural areas saw a rate of 1.73%, increasing by 0.06 percentage points from the previous quarter and 0.03 percentage points year-over-year.
As of the first quarter of 2020, approximately 492.9 thousand young individuals aged 15 to 24 are unemployed, representing 44.1% of the overall unemployed population This demographic experienced a youth unemployment rate of 7.0%, reflecting an increase of 0.5 percentage points from the previous quarter.
0.56 percentage points from the same period last year The youth unemployment rate is 5.4 times higher than the unemployment rate of the adult population (those aged 25 and over)
The COVID-19 pandemic, which emerged in Vietnam in late January 2020, has had a profound impact on the labor market, resulting in increased unemployment and a surge in underemployment rates Notably, the underemployment rate among certain age groups reached its highest level in the last five years during the second quarter of 2020, highlighting the pandemic's devastating effects on the workforce.
In the second quarter of 2020, the number of unemployed individuals of working age reached nearly 1.3 million, reflecting an increase of 192.8 thousand from the previous quarter and 221 thousand compared to the same period last year The working-age unemployment rate rose to 2.73%, marking an increase of 0.51 percentage points from the prior quarter and 0.57 percentage points year-on-year Notably, the unemployment rate for urban areas surged to 4.46%, which is up 1.28 percentage points from the previous quarter and 1.36 percentage points from the same period last year, representing the highest urban unemployment rate in a decade.
In the second quarter of 2020, approximately 410.3 thousand young individuals aged 15 to 24 were unemployed, representing 30.7% of the total unemployed population The youth unemployment rate stood at 6.98%, unchanged from the previous quarter but up by 0.3 percentage points compared to the same period last year This increase in youth unemployment was largely attributed to the widespread effects of the Covid-19 pandemic.
Measures used by the government of Vietnam to reduce unemployment
Stimulus package
- Aimed at small and medium enterprises Providing capital and applying preferential policies to this business sector is first of all to stimulate production, thereby creating jobs.
- Stimulate demand by investing, developing and perfecting infrastructure.
Accelerating the development of ongoing construction projects and extensively renewing and upgrading deteriorating infrastructure is essential to address the concerns raised by foreign investors about our country's weak infrastructure This initiative will not only enhance project efficiency but also generate numerous job opportunities for workers, effectively tackling the issue of surplus labor resulting from job losses during the recession.
Fiscal policy
During an economic recession, when national output falls below its potential, unemployment rates rise To combat this, the government implements expansionary fiscal policies, which may involve increasing budget expenditures, cutting taxes, or both This approach boosts aggregate demand, leading to increased output, job creation, and a reduction in unemployment.
The Ministry of Finance has swiftly implemented a tax reduction program that includes incentives for various taxes, fees, and procedures This initiative features a significant reduction in VAT across numerous items and aims to lower income tax, stimulating consumer spending and investment As a result, this program is expected to generate more job opportunities and contribute to a decrease in the unemployment rate.
Attract foreign investment capital
Vietnam's open economic policy aims to foster international integration and attract foreign investment, which plays a crucial role in job creation, technology transfer, and overall development.
In 2021, foreign direct investment (FDI) enterprises in Vietnam generated 4.6 million jobs, representing over 7% of the nation's workforce Beyond direct employment, the FDI sector also fosters job creation in supporting industries and businesses within its supply chain Workers in FDI enterprises earn an average salary of 11.2 million VND per month, which is significantly higher than that of employees in both state-owned and non-state sectors, approximately 1.2 times the national average.
Open career guidance classes and improve the quality of education and labor resources
Unemployment can often be attributed to a mismatch between the quality of human resources and the demands of socio-economic development To address this challenge, it is essential to prioritize the enhancement of human resource quality as a national strategy Mobilizing diverse investment resources is crucial to expanding both the scale and the quality of training and development programs for human resources.
- Organize career orientation sessions at educational institutions, high schools, universities, and vocational training centers to help students understand their future work desires and future life needs.
To enhance economic efficiency, it's essential to guide workers towards high-value occupations within value chains This transition requires that workers possess the necessary knowledge and professional skills to gradually shift from the less effective agricultural sector to more lucrative industries.
Public training program
The quality of human resources in our country is insufficient, characterized by a lack of dynamism, creativity, and an industrial work ethic Many workers lack the necessary knowledge and skills for teamwork, risk management, and initiative-taking To address these challenges, rural workers require comprehensive training and vocational education to acquire professional qualifications and updated knowledge, enabling them to effectively operate modern machinery and equipment, which is essential for meeting the evolving demands of the national economy.
- Aim to equip workers displaced from declining industries with the skills needed in growing industries.
Expand job introduction centers
The opening of job introduction centers has made the connection between businesses and workers easier and reduced the unemployment rate.
Job introduction centers are vital in bridging the gap between job seekers and employers By facilitating effective interactions between labor supply and demand, these centers help reduce unemployment rates, enabling candidates to discover suitable job opportunities while allowing businesses to swiftly find qualified personnel.
Employment agencies play a crucial role in career counseling and skills development, offering essential training that enhances workers' abilities and boosts their appeal in the competitive labor market By addressing the skills gap, these services empower job seekers and improve their chances of securing employment.
To navigate the challenges of industrial transformation and the evolving labor market, enhancing job placement centers is essential These centers play a crucial role in empowering workers to access new opportunities and adapt seamlessly to various professions, facilitating a smoother transition in their careers.
Expanding job placement centers can significantly benefit disadvantaged groups, including individuals with disabilities, the elderly, and those who have experienced job loss By prioritizing support for these populations, the government can foster a more equitable labor market, ensuring that everyone has a fair chance to participate and succeed in their employment endeavors.